Abstract:

Consumers generally have various mental expectations when selecting a product. If the product meets the mental expectations， consumers will make a purchase decision； otherwise，consumers may give up the purchase. In this paper， it is considered that consumers have both price reference effect and greenness reference effect， i.e.， consumers set a reference price and a reference greenness for the products in advance before making purchase decision， and examine whether the green products meet the mental expectations. Firstly， a closed-loop supply chain consisting of a manufacturer， a retailer and a recycler is tatken as the research object， and the influence on the pricing decisions of the closed-loop supply chain members when consumers have green preferences and dual reference effects is studied. Then differential game model with dynamic changes in product greenness level is constructed to depict the mechanism of product greenness on each member. Next decentralized decision- making and two-way cost-sharing contract coordination scenarios are also considered. In the contract coordination scenario， manufacturer shares part of the recycling cost and retailer shares part of the green R&D cost to improve the recycling rate of used products and the greenness of green products. Finally， the results are verified and illustrated using numerical simulations. It is found that： 1. Although the price reference effect leads to a decrease in the retail and wholesale prices of the products， the supply chain members can still profit due to the increase in sales volume. And when the price reference effect meets certain conditions， it has a promotional effect on the recycling rate of used products， which has not been mentioned in previous studies.2. When the product’s greenness is greater than the consumer's reference greenness， the greenness reference effect always has a positive impact on supply chain members， among which， the effect on manufacturers is the greatest. When the product greenness is smaller than the consumer's reference greenness， and the greenness reference effect is relatively weak at this time， the manufacturer's profit has a small reduction.3. When both effects exist at the same time， the promotion effect of the greenness reference effect is larger than the price reference effect， and the price reference effect shows a trend of first inhibiting and then promoting the manufacturer's and retailer's profit； it always has a promotion effect on the recycler. 4. The two-way cost contract effectively coordinates the supply chain system， weakens the double marginal effect in decentralized decision-making， and improves the overall economic efficiency of the supply chain. With the increase of manufacturer's cost-sharing， the wholesale price and retail price of the product decrease， and the green input of the product and the greenness of the product increase； with the increase of retailer's cost-sharing， the green input of the product and the greenness of the product have a tendency to grow. Although it leads to a decrease in product price when the manufacturer bears the cost of recycling， it also promotes an increase in recycling rate and sales volume， so the profits of the supply chain members are greater in this case than in the case of decentralized decision making.

Key words: Reference effects, closed-loop supply chains, two-way cost-sharing contracts, differential game